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TEB Faktoring

Founded in 1997, TEB Faktoring is one of Turkey’s leading factoring service providers.
TEB Faktoring seeks to satisfy its customers’ needs by offering quick solutions. Strictly abiding by and implementing corporate governance principles, TEB Faktoring is also a service provider that distinguishes itself by virtue of its technical infrastructure, human resources, and vast knowledge and experience in the factoring industry.

TEB Faktoring plays a pioneering role in its sector by developing innovative products and services. During 2009 when small and medium-sized businesses were confronted by a global business downturn, TEB Faktoring continued to support the real sector without interruption.

The best export factoring company in 2009
TEB Faktoring was voted “Best Export Factoring Company In 2009” by Factors Chain International (FCI), which gave the company an “excellent” rating with a total of 96.4 points out of a possible 100.

Originally founded in 1968, FCI is the world’s biggest association of factoring companies. Consisting of 244 factoring concerns from 65 countries, FCI members wrote USD 1,110 billion worth of business last year. Together they handled 65% of the world’s factoring business and 82% of all international factoring.

TEB Faktoring General Manager Çağatay Baydar was elected Vice President of FCI in 2009.

Financial performance…
All of TEB Faktoring’s marketing activities are shaped by its strategy of spreading its risk base as much as possible. In 2009 TEB Faktoring wrote USD 1,686 million worth of factoring business, of which USD 1,193 million was domestic factoring and USD 493 million was international factoring. The company commanded a 6% market share last year. As a result of all of its activities in 2009, the company booked a profit of TRL 7,616,000 on total assets worth TRL 437.5 million.

CEP Faktoring
CEP Faktoring is an innovative product specially developed for small and medium-sized enterprises (SME). Through CEP Faktoring and mobile offices that serve such businesses, TEB Faktoring takes factoring services right to the customer’s doorstep. As a pilot project, four vehicles designed and equipped to function as offices traveled around and promoted factoring in industrial parks where small businesses are concentrated.

The aim of CEP Faktoring, the first undertaking of its kind in Turkey, is to make it possible for businesses in localities outside major cities to take advantage of factoring products and services as conveniently as possible.

In 2010 TEB Faktoring plans to increase the number of such specially-designed and fully-equipped mobile offices and to continue promoting factoring services in industrial parks around the country where SMEs are to be found.

TEB Faktoring believes that Turkey’s GNP will grow about 3% in 2010 and that the Turkish factoring industry will finance about a 4.5% share of that growth. On this basis, the industry can also expect to write about USD 27.5 billion worth of business in the coming year.

In 2010…
Having gone through a transition period in which it completed its infrastructure and put together new packages of products, TEB Faktoring made a quick start as it entered 2010. During 2010, TEB Faktoring will once again be working to take care of small businesses’ liquidity needs in its capacity as a leading player in its sector. TEB Faktoring expects to see a growth rate on the order of 25-30% in 2010.

TEB Portföy

Risk-profiled portfolio management services for individual and institutional investors
Founded in 1999, TEB Portföy’s fundamental objective is to determine the investment vehicle compositions of investment portfolios based on the risk profiles of their individual and corporate customers and to manage those portfolios accordingly.

TEB Portföy has been providing asset management services since June 2004. The goals of asset management services are to understand the company’s individual and corporate customers’ investor profiles in line with its analysis of their risk vs return preferences and from among a range of investment model possibilities, to determine the one that best balances risk and return in the customer’s view.

As of end-2005, TEB Portföy began providing corporate asset management services for corporate customers as a specialized line of its asset management services.

The asset management company of the future
TEB Portföy has successfully laid the foundations of an asset management company whose goal is to position itself in the international arena. Having entered into a synergetic collaboration with its partner BNP Paribas Asset Management, a leading name in the asset management business in the Eurozone, TEB Portföy is determined to advance quickly towards its goal of becoming a global player.

Innovative approaches in everything from product design to delivery channels
TEB Portföy gives great importance to designing and delivering innovative products. PortföyPro, FX Performance Model, a range of principal protected funds, and a BRIC fund, are just a handful of the innovative products that TEB Portföy has recently brought to market that first come to mind.

TEB Portföy also provides management services for the mutual funds of Millennium Bank.

Changing trends and TEB Portföy…
Mutual funds in Turkey have been largely successful in protecting their asset values despite the ravages of the global economic crisis for over a year whereas their European cousins have suffered average losses on the order of 18%. This is because mutual funds in Turkey tend to invest mainly in money market assets rather than in equities and this practice has shielded them against the worst effects of the crisis.

TEB Portföy believes that interest rates will be coming down in the nearer term and that investors will be looking for different opportunities amidst the uncertainties engendered by the current crisis environment. That being so, one may expect that the need for professional management skills will be felt even more sharply and that both individual and corporate investors will be turning their attentions to mutual funds and to private portfolio management services.

Along the same lines, one may guess that more equities, forward contracts, and other capital market vehicles will be included in funds’ portfolios and that both principal-protected and guaranteed mutual funds will emerge to the fore as investors’ preferred investment vehicles.

The most important consideration to which TEB Portföy gives attention when designing products is to come up with products that have been formulated according to the rights strategies and to supply them to the right customers at the right times. One of the most important factors that will ensure the survival and growth of products that are developed is undoubtedly the existence of a good risk management system. TEB Portföy has fully integrated into its own system the RiskMetrics program which is used in all of BNP Paribas Asset Management’s offices worldwide and which makes it possible for the risks incurred on all assets both owned and managed by the company to be quantified instantly.

Performance highlights…

In the first nine months of 2009, the mutual fund industry’s assets under management increased 25.7% in value and reached TRL 30.3 billion (USD 20.5 billion). “Type B” (bond & bill/money-market) funds were worth a total of TRL 29.3 billion while “Type A” (equity) funds had combined resources amounting to around TRL 974 million. As of end-2008 the sector had TRL 24.1 billion (USD 16.3 billion) under management and in the twelve months to that date the aggregate values of “Type A” funds, “non-liquid” (bond & bill) Type B funds, and “liquid” (money market) Type B funds had increased 62.5%, 124.6%, and 9.8% respectively. As of the same date, 74% of the industry’s assets consisted of Type B money-market funds, 23% of Type B bond & bill funds, and only 3% of Type A equity funds. As of December 2009 on the other hand, Type B money-market funds accounted for an 85% share of the total.

In the twelve months to end-2009 the total value of the mutual funds under TEB Portföy’s management had increased 23% to TRL 1.2 billion. During the same period, the company’s market share slipped slightly from 4.01% to 3.94%. At the end of the year, TEB Portföy was managing 26 portfolios consisting of:

• 18 Türk Ekonomi Bankası mutual funds

• 5 TEB Yatırım Menkul Değerler mutual funds

• 3 Millennium Bank mutual funds.

At the same time the company was managing two pension funds for Anadolu Hayat Emeklilik while also providing portfolio management services for its corporate and individual customers.

Among the funds under TEB Portföy’s management, the proportion of those demanding advanced management skills is higher than it is at any other portfolio management company in Turkey. TEB Portföy also serves as a consultant for the Parvest Turkey Equity Fund that is managed by BNP Paribas Asset Management.

At end-2009, TEB Portföy was managing the portfolios of 29,108 individual and corporate customers and of 11 institutional customers. The total value of the non pension fund assets under management was TRL 1,289 million while the two Anadolu Hayat Emeklilik funds amounted to TRL 25 million.

As it advances towards becoming the asset management company of the future, TEB Portföy is committed to building its tomorrows on the solid foundations provided by its strong global partnerships, its culture of innovation, its extensive distribution network, its superior human resources, and its customer-focused approach to service.

TEB Finansal Kiralama

Serving a sector-diversified customer portfolio

TEB’s first subsidiary, TEB Finansal Kiralama is a leasing company that was founded in 1997.

TEB Finansal Kiralama provides leasing products and services primarily for firms in the construction, medical services, transportation, printing, agriculture, metalworking, textile, and food industries. In addition, the company is also looking into ways to further diversify into energy and mining and into niche markets such as waste treatment.

Performance highlights
The appetite for investment paled considerably in response to the global economic crisis in 2009 and this had a serious impact on the leasing industry. The sector’s total business volume shrank 58% as the amount of new business written plummeted from USD 5.3 billion in 2008 to USD 2.2 billion in 2009.

In a year characterized by such a contraction, TEB Finansal Kiralama booked a turnover worth USD 71 million and achieved a market share of 3.2%. While the sector-wide non-performing loan ratio reached 12% or so as of September 2009, the significantly lower 5% level at TEB Finansal Kiralama was eloquent evidence of the company’s rational credit placement policy.

TEB Finansal Kiralama had total assets worth TRL 512.4 million in 2009. The most important item among those assets were the company’s leasing receivables, which amounted to TRL 407.2 million in value. Shareholders’ equity, always the most important indicator of healthy growth, was TRL 96.6 million.

The enduring importance of cross-sale opportunities…
As in 2008 so to in 2009, making cross-sales was foremost among the issues to which leasing companies gave their attention. Some 65% of the leasing sector’s business was generated through branch branches. In 2009, such contracts reached an aggregate value of USD 58 million and cross-sales accounted for no less than an 85% share of the sector’s business portfolio.

The successful and innovative campaigns that TEB Finansal Kiralama conducted jointly with TEB under the heading of cross-sale operations earned the firm the “Most Innovative and Creative Group Company” award in the 2009 TEB Group Innovation Awards program.

Tedarik Lease and other campaigns…

TEB introduced a new product called “Tedarik Lease” (“Supply Lease”) that was specially designed for the suppliers of the firms in the bank’s corporate and commercial customer portfolios. This product increased cross-sale opportunities within the group by means of highly advantageous packages made available to the suppliers of firms that worked with TEB’s corporate and commercial branches.

Efforts to keep interest in leasing products and services lively was supported by means of other campaigns conducted jointly with the bank such as “LeaseRace”, “TEB Leasing Summertime”, and “All Star 2009”.

During 2009 TEB Finansal Kiralama also gave heightened attention to vendors that were working together with the BNP Paribas Lease Group (BPLG). The number of vendors with which both firms did business jointly reached 20 while a variety of sales-based programs and joint campaigns were organized.

In the future…

In parallel with ongoing economic developments, leasing is ceasing to be solely a source of medium-term financing for which goods serve as the collateral and it is becoming instead a credit product which demands serious technical analysis and for which the importance of consultation emerges to the fore.

TEB Finansal Kiralama believes that this trend is going to become even more evident in 2010. With this in mind, the company will be seeking to further develop its products and services accordingly and to reach an increasing number of customers through its strong distribution network.

TEB Yatırım

TEB Yatırım is a TEB brokerage house subsidiary that became operational in 1997. The company enjoys a strong reputation as much for its ability to respond nimbly and quickly to its customers’ changing and complex needs as for its superior services.

2009 was a year of precarious yet sluggish markets…
TEB Yatırım’s equity trading brokerage services continued to be the firm’s principal business activity during 2009 in parallel with sectoral conditions and with the interests of the investor base.

Nevertheless there was a significant amount of growth in forward trading brokerage services, a business line into which TEB Yatırım has been expanding rapidly recently. Market developments and economic uncertainties almost everywhere made it all but impossible to supply corporate financing services such as public offerings while both the supply of and the demand for consultancy services remained virtually nil.

On the international investor front…
As was the case with other developing markets in 2009, there were significant declines in capital inflows into Turkey whether as portfolio investments or as foreign direct investments. Nowhere was this trend more in evidence than it was in foreign institutional investors’ appetite for Turkish capital market equities.

There was only about USD 1.3 billion worth of such portfolio investment in 2009 while nearly USD 3 billion had left the country in 2008. This resulted in a significant contraction in TEB Yatırım’s foreign institutional investor business, a situation that indeed prevailed throughout the entire sector.

At the İstanbul Stock Exchange, there was about a 30% decline in the average daily volume of trading by foreign investors. For those brokerages operating in Turkey that were mostly foreign-owned, this situation led to huge losses in market share and in some cases even to the suspension of activities. TEB Yatırım by contrast managed to maintain its market share and even to take on new customers.

Resident investors have become more discriminating in their service perceptions.
In the case of brokerage services provided to individual investors who are residents of Turkey, results were rather more successful despite the existence of similar sectoral constraints. High levels of market volatility during the year did not lead to a contraction in trading volumes among domestic investors as they did among foreign; on the contrary, they generated even higher transaction volumes than might otherwise have been expected.

Greater sales effectiveness combined with greater discrimination in service quality perceptions among investors last year made it possible for TEB Yatırım to double both its transaction volumes and its earnings over what they had been the year before. In 2009 TEB Yatırım strengthened both its total market share and its position in the sector while also successfully making up for the revenue losses that it sustained as a result of the cutback in its international investor trading activities.

The futures market continued to grow despite the economic crisis.
The futures & options market in Turkey continued to flourish and reached record trading volumes despite the economic crisis.

Indeed TEB Yatırım futures brokerage was the business line that was the least affected by the crisis. The company’s brokerage services in such trading did well in terms of both volumes and market shares.

TEB Yatırım’s commission fee earnings trebled while its market shares and trading volumes doubled. There was a net rise in the number of resident customers while, beginning with the second quarter of the year, there were also significant gains in services supplied to non-resident customers.

Strongly positioned in the sector
TEB Yatırım numbered among the leading contenders in the sector in terms of both income and volume in 2009. TEB Yatırım ranked:

• 7th with a 3.4% share of equity trading volumes and, in terms of earnings, among the top five from the standpoint of customer profitability;

• 16th in futures & options brokerage services with a 2% market share and, in terms of earnings, among the top ten.

TEB Yatırım’s competitive advantages played a big role in its having achieved such healthy results. Considered from a strategic perspective, TEB Yatırım’s productive financial structure, effective staff, and change-accommodating flexible infrastructure make up the building blocks of the company’s sustainable growth and development.

BNP Paribas Securities Services
TEB Yatırım’s business operations are fully integrated into the branch network of BNP Paribas Securities Services. TEB Yatırım engages in a synergetic collaboration with BNP Paribas Securities Services not only to keep abreast of market developments in the best way possible but also to take maximum advantage of any customer-based cross-sale opportunities that present themselves.

TEB Yatırım provides brokerage and custodian services to all BNP Paribas group companies that are involved in investment in Turkey.

The Economy Bank NV

Founded in 1998, Netherlands-based The Economy Bank NV (TEB NV) became operational the same year. TEB NV provides its customers with a wide range of banking products and services that include international trade & commodity finance, forfaiting, treasury, private banking, and retail deposit accounts.

TEB NV’s goal is to be one of the most active and service-focused players in Turkish and European financial markets in its capacity as the TEB Group’s specialized service provider in the international trade & commodity finance business line. TEB NV seeks to pursue growth and to enlarge its business volumes by negotiating its customers’ foreign trade transactions throughout an expanding geographical region.

A proactive portfolio management strategy under crisis conditions
TEB NV adhered to a proactive strategy in the face of the crisis conditions that beset the global financial sector as of the last quarter of 2008 while choosing to manage its loan book and balance sheet volumes with an approach that was even more risk-sensitive than usual. In keeping with this approach, the bank decided to increase the relative weight of liquid financial institution debentures in its portfolio toward the latter part of that year. Not until the last quarter of 2009 did TEB NV gradually begin increasing its portfolio’s exposure to corporate customer risk once again.

Throughout 2009 it was TEB NV’s policy to manage its cost base with even greater care and in this way it succeeded in balancing its expenditure/income ratio at the 45.9% level. The bank’s pretax profit in 2009 was down 5% year-on and amounted to EUR 9 million. One of the reasons for the observed reduction in profit was the bank’s decision to set aside more generous provisions in line with its more sensitive risk management policy. Be that as it may, TEB NV’s loan book remained sound in 2009 with a very low NPL ratio on the order of just 0.88%.

During 2009 TEB NV negotiated a total of EUR 1.2 billion worth of foreign trade finance.

The strong performance registered by TEB NV in the retail banking business line that it first ventured into in 2007 provided the bank with an important means of achieving optimal balance in its portfolio in the face of adverse market conditions. By the end of 2009, the number of TEB NV’s retail banking customers had reached 11,000.

With its high capital adequacy and highly liquid financial structure, TEB NV is focused on pursuing growth in different business lines with particular attention to be given to foreign trade finance and retail banking.